Does Your Supply Chain Need a Makeover?

Picture a house built in the 70s with the best materials and design of the day. Over time, families have moved in and out, built a second story, converted the garage, added on a few rooms, and knocked down some walls. It meets the needs of its current occupants, but its piecemeal floor plan would never be used to build a new house today.

Does your supply chain need a makeover?

Now, imagine what a picture of your supply chain would look like. Would it resemble that house? Much like the home in the example, many supply chains have evolved organically over time. The supply chains serve their purpose, and may even operate pretty effectively, but they’re in no way strategic. They are probably excellent targets for improving financial performance and customer satisfaction.

When considering your supply chain, think through the answers to these questions to determine whether it’s time to overhaul your supply chain:

Is your supply chain responsive?
Could it flex and adapt to volatility in demand or in the event of an event like a hurricane? If your supply chain would collapse in the face of significant uncertainty, it may not be responsive enough to today’s on-demand expectations.Read What is Supply Chain Risk? to review four common supply chain risks and get suggested actions to make your supply chain more resilient.

Do you have adequate control over your carriers?
Are they missing deadlines or cherry-picking loads while leaving others behind? Examine your contracts with each carrier, then hold both parties accountable for the agreements you have in place. Alternatively, renegotiate contract terms, or seek out carriers who are better equipped to meet your specific needs.

Do you have key performance indicators in place to monitor critical measures in your supply chain?Accuracy and timeliness of data are critical in supply chain management. If you’re not measuring the right things, then you have no way of knowing or correcting the problems affecting your business performance. An article in Materials Handling & Logistics gives metrics examples from National Semiconductor, who uses 15 different KPIs to keep tabs on its supply chain, and Dow Corning, who keeps a dashboard on its intranet where employees can see how the business is performing in real time. Find the measures that are meaningful for your business, then use them to tackle breakdowns in your supply chain.

Are you unable to keep commitments or meet deadlines?
If not, dig deeper to understand the root cause. Are disorganized warehouses to blame? Poor inventory tracking systems? Carriers who are at capacity and can’t meet increased demand? Or, the problem could be underlying systems that can’t adapt quickly enough to keep up with construction timelines or customer demands.

Are you experiencing inventory imbalances?
Again, look for the underlying issues. Inaccurate forecasting, faulty or missing data, or slow adoption of technology could be contributing factors. If you’re regularly experiencing imbalances, it might be time to work smarter, not harder, on your supply chain.

Do you look at your supply chain and wonder “why do we do it this way?”Just like the home in the example, links in your chain may have evolved over time and worked as add-ons or even bandages, but they may not be adding value today. Instead of maintaining the status quo because you’ve always done it that way, invite new processes and new technology to deliver better results.

Is your supply chain constantly evolving?
It should be. Especially with technological advances and an ever-changing business climate, your supply chain shouldn’t be static. Sometimes a total makeover is in order, but regular oversight and adjustments are a must for delivering on your promise to customers.

Are regulatory changes on the horizon?
Alongside your suppliers and customers, monitor pending legislation and standards that could drive radical shifts in your supply chain. For example, if California is exploring environmental regulations, be prepared to flip a switch and meet new demands from your customers on the west coast.

If major storms never hit, customers always ordered what you forecasted, and production was always on schedule, then supply chain management would be much less complicated indeed! But the world is predictably unpredictable and changing all the time. That’s why businesses should ask themselves the questions listed here, or partner with Accuserv to evaluate their current supply chains. If many of these factors are at play, it’s time for a supply chain makeover.